Incentivise digital payments made via RuPay cards, BHIM: Panel

NEW DELHI: A high-level panel set up by the Goods and Services Tax Council has given a proposal for incentivising digital payment through RuPay cards and BHIM app by way of a cash back.

Once implemented, customers making payments using RuPay card and BHIM UPI get a cashback of 20% of the total GST amount, subject to a maximum limit of Rs 100.

The recommendations of the Group of Ministers (GoM) will now be placed before the GST Council on Saturday.

Briefing reporters after the meeting, Sushil Modi said the move to provide cash back to users of RuPay and BHIM is intended to encourage use of digital mode of payment, especially in semi urban and rural areas.

The move will have a revenue impact of Rs 1,000 crore annually, to be shared equally between the Centre and states.

Asked as to by when the cash back would be credited to the bank account, Modi said the detailed modalities will be worked out once GST Council clears the proposal.

He said based on the success of this move, the incentives will be extended to users of all card holders at a later date.

The council had in its meeting on July 21 tasked the GoM to work out modalities for incentivising digital payments under GST for users of RuPay and BHIM.

All Jan Dhan account holders have Ru-Pay cards, which is launched by National Payments Corporation of India (NPCI).

BHIM, a mobile app developed by NPCI, is based on United Payment Interface (UPI) for cashless payments.

The GoM had last month decided to defer by a year the proposal to incentivise digital payments under GST, citing revenue implications of doling out concessional tax rate. At that time the GoM was looking at incentivising digital payments using all modes of online payments.

However, the GST Council, chaired by Union Finance Minister Piyush Goyal, in its latest meeting on July 21, asked the GoM to have a re-look at the possibility of early introduction of concessions for digital payments.

To incentivise digital transaction, the GST Council in its last meeting in May had discussed giving a concession of 2% in GST rate (where the tax rate is 3% or more) to consumers making payment through cheque or digital mode. The discount would be capped at Rs 100 per transaction.